Donation Exemption Under Income Tax

What is a Donation exemption under income tax?

Section 80G deduction of the Income Tax Act is allowed for the amount paid by the taxpayer as a donation to any fund or institution or charitable Trust. All donations are not treated equally under Income Tax Act. Donations to certain funds and institutions qualify for a 100% or 50% deduction without any qualifying limit.

What is the limit of 80G income tax exemption?

The maximum amount allowable under Section 80G shall be 50% of the lower amount donated or the qualifying limit for your donations under Section 80G, which is 10% of your adjusted gross total income.

Section 80G of the Income Tax Act, of 1961, allows taxpayers to save tax by donating money to eligible charitable institutions. By donating to eligible institutions and organizations, taxpayers can claim deductions ranging from 50% to 100% of the amount donated.

Documents required to claim a tax deduction on donations:

The receipt must include information such as the donor’s name, address, PAN, trust registration number, and name, as well as the donation amount and method of payment. Form 58 is required if the donation qualifies for a 100% deduction.

What is the mode of payment under Section 80G?

Demand draft

Cash (for donations below Rs 2,000)

Cheque

The above details need to be mentioned in the respective tables given in the ITR.

Table A: For donations entitled to 100% deduction without qualifying limit

Table B: For donations entitled to 50% deduction without qualifying limit

Table C: For donations entitled to 100% deduction subject to qualifying limit

Table D: For donations entitled to a 50% deduction subject to the qualifying limit

List of donations eligible for 100% deduction without qualifying limit:

• National Sports Fund
• National Cultural Fund
• National Defence Fund set up by the Central Government
• Prime Minister’s National Relief Fund
• National Foundation for Communal Harmony
• An approved university/educational institution of National eminence
• Zila Saksharta Samiti
• Fund set up by a state government for medical relief to the poor
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa (Public Contributions — India) Fund
• Swachh Bharat Kosh

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Originally published at https://onlinechartered.com on May 25, 2023.